Japan weighs lower tariff on EU pork for trade deal

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Nikkei | 13 June 2017

Japan weighs lower tariff on EU pork for trade deal

The Japanese government is close to offering to cut its import tariff on pork from the European Union, a move meant to help bring negotiations on an economic partnership agreement to fruition.

The proposed reduction, now in late-stage discussions in Tokyo, would bring pork tariffs to the same level to which Japan agreed in the Trans-Pacific Partnership multilateral trade pact. Japanese and EU chief negotiators meet in Tokyo starting Tuesday to seek a consensus on outstanding issues.

Pork ranks alongside dairy products as a high priority for the EU side. The EU is Japan’s largest source of imported pork, accounting for 17% of the Japanese market for the meat. Denmark and Spain contribute 70% of this share, with the latter known for raising Iberian pigs used to make fine ham.

Japan applies three different tariff rates on imported pork, depending on price per kilogram. Tokyo is looking to reduce the tariff on pork priced in the upper 400 yen ($3.60) range and below. The rate for the 300 yen range would fall to one-fifth the current level, while the high-end rate would be eliminated in the 10th year after an agreement enters into force — the same period as in the TPP.

To prevent a rapid influx of imports, the Japanese side will seek a safeguard that raises tariffs in the event a certain volume threshold is crossed.

Japan and the EU still face tariff negotiations on a number of goods as they seek to reach a broad deal on an economic partnership agreement in July. It remains to be seen how low both sides are willing to go on key priorities for market access — wine, meats and dairy products for the EU, automobiles for Japan. A Japanese offer on pork would suggest an attempt to elicit concessions on cars from the EU side.

Hurdles remain

Reaching a deal in July "will require at least settling all the tariff issues," according to a Japanese government source close to the negotiations.

When it comes to cheese, a priority area for the EU, Japan succeeded in maintaining its tariffs in the TPP negotiations against such big dairy exporters as Australia and New Zealand. On beef, Ireland and a few other EU members seek greater access to the Japanese market. Hardly any EU beef sells in Japan.

The EU side also seeks an early elimination of import tariffs on wine, with France, Italy and other producers thirsty for greater access to the Japanese market.

Tariffs are just one of 27 areas in the agreement. Others are sure to require further negotiation as well. Japan has proposed an investor-state dispute settlement mechanism that allows investors to sue governments for redress for unfair treatment. The EU, meanwhile, favors a permanent court to decide investment disputes. Both sides may decide to put off settlement of some tricky issues until after a broad deal is reached.

source: Nikkei